Risk adjustment and talking to avoid diabetes

Risk adjustment is used to move money from insurer pools that are relatively healthy to insurer pools that are relatively unhealthy. Diabetes is one of the most common chronic conditions in the Exchange pool and it is very common in the Medicare Advantage risk pools as well. The risk adjustment factors are calculated based on several years of data to determine the relative incremental cost of a disease state and then fitted to a general medical cost trend line.

From this morning’s post on the YMCA diabetes minimiziation program that is now a standard Medicare benefit, I think there is an opportunity for Medicare Advantage insurers to aggressively game risk adjustment by doing good because the risk adjustment factors will be overpricing the cost of diabetes for a year or two.

The new intervention was about $205 per person, a fraction of the original cost.

They estimate that if the Y program were expanded to all Medicare beneficiaries, the government might save about $2,650 per participant over 15 months, much more than the program cost.

Why is this?

To qualify for the program, an individual’s A1C levels had to be high enough to justify a diagnosis of pre-diabetes. Quite a few individuals will get a diagnosis of uncomplicated type 2 diabetes. The old risk adjustment factors covered the cost of traditional treatments so that over a large enough population, diabetes is a break-even proposition for Medicare Advantage insurers. Those risk adjustment factors don’t change that quickly. So if the Medicare Advantage insurers can set up diabetes coaching programs similar to the YMCA program that produce somewhat similar results in the very near future, they’ll still be getting risk adjustment payments for higher cost traditional treatment even as the lifestyle training and coaching through the Y leads to better results and much lower costs. This is a short term opportunity to get outsized profits from diabetes as each year going forward replaces a traditional diabetes experience year with a year of traditional plus lifestyle coaching experience year which should lead to a lower risk adjustment factor.

In a couple of years, insurers that still only pay for traditional and less effective diabetes management will be getting risk adjustment payments for their diabetic population that are far less (because it is based on coaching costs as a primary treatment regime) than their actual medicalized costs of treatment.

 






21 replies
  1. 1
    JCJ says:

    In a couple of years, insurers that still only pay for traditional and less effective diabetes management will be getting risk adjustment payments for their diabetic population that are far less (because it is based on coaching costs as a primary treatment regime) than their actual medicalized costs of treatment.

    So how does this fit in with the cries for “Singe Payer!” I don’t want to sound like Mitt Romney and talk about competition, but could this way be better than a single payer that doesn’t have a motivation to innovate/try something new?

  2. 2
    Prescott Cactus says:

    Richard,

    The YMCA program sounds great, but I wonder what % of those referred actually go thru the 16 one hour sessions ? For a health conscience individual it’s great news, but to a lethargic inactive patient, will they look at the commitment as too big, too much ?

    THANKS !

  3. 3
    Kylroy says:

    @JCJ: Eh, the government still has an incentive to save money under single payer. This is one of those healthcare resource allocation issues that isn’t overly affected by the coverage mechanism.

  4. 4
    Mnemosyne says:

    Now if only we can convince insurance companies that ongoing therapy + medication for mental illness is far more cost-effective than medication alone …

  5. 5
    Prescott Cactus says:

    @Mnemosyne: Agreed and would addiction illness as well.

  6. 6
    amygdala says:

    @Mnemosyne: I suspect (but can’t prove) some of this is driven by a serious shortage of mental health professionals. Hoping that insurance parity will help, but training practitioners takes awhile.

  7. 7
    Mnemosyne says:

    @Prescott Cactus:

    I think a big part of the problem with treating addiction right now is that they herd everyone into 12-step programs (because they’re free) without bothering to screen people for other problems. That’s how my niece and nephew’s severely ADHD and bipolar father missed getting diagnosed until his mid-30s when it turned out that staying off drugs for 6 months didn’t actually solve his mental problems.

    I still think that addiction is a specific mental illness that hasn’t been properly differentiated yet, though there have been some interesting studies about the connections between gambling addiction and OCD. It will probably turn out to be some kind of OCD-related disorder, which would explain why group therapy (even amateur group therapy) works for some people as long as they go every week.

    But if you’re drinking too much or taking too many drugs because you have untreated ADHD, or an anxiety disorder, or a mood disorder, the 12 steps are only going to take you so far, because you’ve only treated the symptom and not the underlying disorder.

  8. 8
    a hip hop artist from Idaho (fka Bella Q) says:

    @amygdala: There is not only a serious shortage of practitioners, there is a frightening crisis about to occur as a huge percentage of psychiatrists retire. And then add in the pay scales for other mental health professionals and it’s shaping up to be a public health crisis that will be shameful and lethal.

    But this is a thread I should stay out of, since I have strong opinions – some biased by spending too much (non-therapeutic) time with psychiatrists, and others also based on recent work on local opiate epidemic response issues.

  9. 9
    Prescott Cactus says:

    @Mnemosyne: Besides the free 12 step programs there are the 7 day rehab centers. One just opened in the senior community after the Hospice Respite Center previously there went “toes up” . Everyone a twitter about junkie zombies roaming the streets. . . Geez !

    The complexities and mental processes of addiction can’t be fixed in a week

  10. 10
    a hip hop artist from Idaho (fka Bella Q) says:

    @Mnemosyne: Ignoring my better instincts, I would like to note that the medical research is quite settled that abstinence-based programs are enormously ineffective for treating any substance use disorder, regardless of whether it is comorbid with an additional psychiatric disorders. Among the challenges in constructing an effective response to the opiate epidemic is to educate the general public, and policymakers, and historically traditional treatment programs that evidence-based treatment for substance use disorders is what’s effective. But the Puritan culture remains in love with abstinence based programs, regardless of evidence that such an approach is rarely effective.

    Sorry; I slipped and had to make a comment.

  11. 11
    a hip hop artist from Idaho (fka Bella Q) says:

    @a hip hop artist from Idaho (fka Bella Q): ETA the only way available to me:

    I still think that addiction is a specific mental illness that hasn’t been properly differentiated yet

    Actually, it has. But it is often comorbid with other brain disorders. And medically assisted treatment is the current evidence-based successful approach, along with very specific cognitive behavioral therapy directed toward the habits surrounding use. Likewise with gambling compulsions, targeted CBT is quite effective. I have seen no data on amateur support groups for compulsive disorders, but I have seen some of the research I on the treatment I described.

  12. 12
    Mnemosyne says:

    @a hip hop artist from Idaho (fka Bella Q):

    I will freely admit that I’m speaking only from observation, but the people I know for whom drug and alcohol abstinence works are the people who don’t have an “off” switch. For anything. One of them decided after getting sober that she wanted to eat more healthfully. Then she became a vegetarian. Then she became a vegan. Then she basically stopped eating, because if eating a little less was good, not eating at all was best.

    That’s why I think there’s another, currently undiagnosed disorder out there that we’re currently calling “addiction” for lack of a better term, but it’s separate from the other issues that can be worsened by drugs and alcohol. And, yes, for

    those specific people

    , avoiding altered states altogether is a good idea because having impaired judgement and no “off” switch is a potentially deadly combination.

    Another sort of related example: it’s a known phenomenon that some people start a diet program (like Weight Watchers) and develop an eating disorder. I wouldn’t be surprised if that’s triggered by the same OCD-like issue that causes other people to drink to excess.

  13. 13
  14. 14
    Mnemosyne says:

    @a hip hop artist from Idaho (fka Bella Q):

    They have apparently been able to make a breakthrough with some patients with Borderline Personality Disorder by doing Dialectical Behavioral Therapy in a group therapy setting. It takes about 18 months, but a lot of people with BPD have reported that it’s helped them.

    Please note that I’m not defending 12-step programs (aka amateur group therapy), but for the OCD-like people I’m talking about, a group setting seems to keep them on track, so it would be nice to have an evidence-based alternative run by professional therapists available instead. I doubt there will ever be a pill that “cures” addiction, so better therapies will be needed, too.

  15. 15
    a hip hop artist from Idaho (fka Bella Q) says:

    @Richard Mayhew: To information for which of my remarks? I may not have them handy if it’s psych data, but can send for them. I can also send for the workforce information, if I can’t find it by searching my own docs.

  16. 16
    Mnemosyne says:

    @a hip hop artist from Idaho (fka Bella Q):

    Also, three, I think we agree that people with mental illness need professional therapy, not amateur group therapy.

  17. 17
    a hip hop artist from Idaho (fka Bella Q) says:

    @Mnemosyne: I’m not going to start or engage in a debate about terminology, but frankly the other thing you’re describing has a clinical term. Medication assisted treatment assists with the use of substances (helping stop them) and CBT is the treatment for the behavioral component.
    DBT is indeed the most successful treatment for the personality disorders, which pose a significant challenge, and always have.

    Group stuff works, even among amateurs, but the unsupervised abstinence only model of treating substance lacks robust data showing success. That’s my issue with 12 step. And the g*d stuff, but that’s a personal beef of mine.

  18. 18
    a hip hop artist from Idaho (fka Bella Q) says:

    @Mnemosyne: Clearly we agree on that, and I don’t mean to seem just disagreeable, but I’ve worked on the perimeters of this topic for years now. I freely admit: IANAMD.

    And I ask everyone I meet to refer to mental illness as “brain disorders” to emphasize that these are physical diseases.

    I’m also a total bitch in 3D, but I’m not trying to be nasty to you here – on this or any other topic. Except in the highly unlikely event you were to get mean to any of my favorite commenters, in which case all bets are off. : )

  19. 19
    Mnemosyne says:

    @a hip hop artist from Idaho (fka Bella Q):

    I honestly don’t think that we fundamentally disagree, and I think we both think it’s a shame that people have to rely on amateur group therapy for addiction because the real thing isn’t widely available or affordable even when it is available — let’s face it, it’s hard to beat “free,” especially for people who are already in crisis.

    I’m lucky that I have relatively mild ADHD and can afford to pay for therapy out of pocket, because otherwise all I would have is 15 minutes with my prescribing psychiatrist every 3 months and maybe 10 therapist sessions a year. And I have good health insurance.

  20. 20
    a hip hop artist from Idaho (fka Bella Q) says:

    @<a href="#comment-5747567

    Ultimately, the PPACA parity provision will improve your situation, which is unconscionable, really. It's my understanding that it hasn't been enforced yet because the regulatory infrastructure for violation penalties is a work in progress. Mr. Mayhew or someone else may have more/better information on the topic. You are fortunate to be able to pay out of pocket.

  21. 21
    amygdala says:

    @a hip hop artist from Idaho (fka Bella Q):

    There is not only a serious shortage of practitioners, there is a frightening crisis about to occur as a huge percentage of psychiatrists retire. And then add in the pay scales for other mental health professionals and it’s shaping up to be a public health crisis that will be shameful and lethal.

    Yup. There’s an overall physician shortage starting to declare itself. Added to a longstanding global nursing shortage, we are in for some tough times. New medical schools are opening and existing ones have expanded their enrollments, but it will be a decade or more until the effects of that are seen. Primary care has rightly gotten much of the attention, but even some lucrative surgical specialties will likely be short on practitioners soon.

    I disagree completely that you should stay out of the discussion. You have made many important points. We desperately need more evidence and less dogma in the field.

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